Citigroup to offer credit cards in China

Rob Schmitz Feb 7, 2012

Kai Ryssdal: Shares of Citigroup have been holding steady the past couple of days, right around $33 apiece. Nothing wrong with that, completely respectable. But somewhat detached from the news, I’d say.

Like the possibility of Citi getting a couple hundred million new customers. As of yesterday, it’s the first foreign bank allowed to issue its own credit cards in China. The Chinese are no strangers to plastic, they’ve got debit cards all over the place.

But credit? That’s a whole different beast. Our Shanghai correspondent Rob Schmitz has the story.

Rob Schmitz: Right now, only 6 percent of commercial transactions in China are made with a credit card. So the country seems like a golden opportunity for Citigroup — its economy is growing; so is its consumer class. But on paper, Chinese consumers don’t appear to be big spenders. On average, the Chinese save six times as much of their incomes as Americans do.

China economist Andy Rothman says this raises an interesting question.

Andy Rothman: The trick is going to be how profitable is this going to be because most people for a very long time, I think, are going to pay off, in full, their credit cards every month, and that’s not really how the banks make money.

Here in Shanghai’s shopping district, 30-year-old Yang Ran says she’s scared of credit cards.

Yang Ran: It’s like spending other people’s money — that makes me uncomfortable and that’s why I don’t ever want one.

But if there’s anyone who can restore hope for U.S. credit card companies in China, it’s a consumer like 26-year-old Ni Peijun.

Ni Peijun: I have a credit card, but I don’t like it very much. I’m always forgetting to pay my bill.

Mr. Ni says he likes how easy it is to buy things now, but he admits if there are more people out there who aren’t paying their credit card bills, it could hurt the banks. It’s a problem Citigroup has seen before, closer to home.

In Shanghai, I’m Rob Schmitz for Marketplace.

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